Buying costs in India range from low to high

October 18, 2018

How high are realtors´ and lawyers´ fees in India? What about other property purchase costs?

Transaction Costs

Who Pays?
Stamp Duty 4% - 8% buyer
Registration Fees 1% buyer
Legal Fees 1.50% buyer
Real Estate Agent´s Commission 1% - 2% (+12.50% VAT)
1% - 2% (+12.50% VAT)
Costs paid by buyer 7.625% - 12.75%
Costs paid by seller 1.125% - 2.25%
See Footnotes
Source: Global Property Guide

How difficult is the property purchase process in India?

A foreign national of non-Indian origin resident outside India cannot buy any immovable property in India. It is illegal for foreign nationals to own property in India unless they satisfy the residency requirement of 183 days in a financial year (a tourist visa lasts for 180 days). It is also illegal to buy property on a tourist visa.

Moreover property cannot be purchased jointly in the name of one eligible person with one non-eligible person. That means a non-resident Indian (NRI) or foreign national of Indian origin (PIO) cannot buy a property jointly with a foreigner (see the excellent Reserve Bank of India FAQ

Company structures are not satisfactory work-arounds (see below).

However, a foreign national resident in India does not require approval of RBI to purchase any immovable property in India. This is because once he is a resident in India, he gets the rights like any other resident. This freedom is however not available to citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan.

Leases are different, too. "Ineligible persons" (e.g. foreign nationals of non-Indian origin and also citizens of certain countries specified above) can acquire residential (not commercial) accommodation on lease not exceeding five years without any RBI permission. However, much property has been ´sold´ to foreigners, particularly in Goa, where prices are cheap and developers are plentiful, on 5 year leases. The buyers won´t get title to the property until they can obtain residency, which is what most of them intend to do eventually. But they may be disappointed - increasingly new visas explicitly forbid foreigners from staying in India more than 180 days consecutively (see article in the Daily Telegraph).

There are also many stories of bribes being paid for the law to be circumvented. Currently an initial investigation into a selection of property deals has been launched by the chief minister of Goa, Pratapsingh Raoji Rane. The worst case scenario facing anyone who has not adhered to the letter of the law as stipulated in the Foreign Exchange Management Act of 1999 is the confiscation of their property assets. Some local xenophobia is being whipped up over this issue (see article in the Forum).

India New Delhi properties for saleA foreign company which has established a Branch Office or other place of business in India, in accordance with FERA / FEMA regulations, can also acquire immovable property in India (see RBI FAQ). However it must be ´is necessary for or incidental to carrying on his business´ and it seems increasingly that the whip is being cracked on those using this as a loophole to acquired residential property to live in or rent.

Non-Resident Indians (NRI), whether Indian citizens or foreign citizens of Indian origin, do not need permission from the Reserve Bank of India to acquire property if the seller is an Indian citizen.

A foreign national of Indian origin is "any person who or either of whose parents or any of whose grand-parents was born in India as defined in the Government of India Act, 1935" or any person who held an Indian passport at any given time.

There is no limit in the amount and/or number of properties that can be bought.

To purchase property, it is important for the buyer to hire a real estate attorney to protect his/her interests during the transaction. Once the property has been chosen, and a price has been negotiated with the seller, the attorney draws up an Agreement of Sale. Upon signing, the buyer normally pays a deposit of 10% to 20% of the purchase price. The lawyer then conducts due diligence and the buyer obtains the title documents from the seller. The title should be checked to have encumbrances.

The conveyance documents must be stamped at the Stamp Duty Office before signing. After this, the remaining balance is settled, and the deed is registered at the Sub-Registrar of Assurance Government duties are paid.

The whole process of registering property requires five procedures, which can be completed in around 44 days.

Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property - lawyers´ fees, notaries´ fees, registration fees, taxes, agents´ fees, etc.

India uses Indian Rupee. Exchange rate is at US$1=INR46.43 as of 17th July 2006.

Stamp Duty
Stamp duty is payable on property transfers. Stamp duty rates vary from 4% to 10%, depending on the location of the property.

Delhi 4% - 6%
Mumbai 5%
Bangalore 6%
Chennai 8%

Registration Fee
Registration fees are around 1% of the property value. Registration fees vary, depending on the location of the property.

Delhi 1%
Mumbai 1%
Bangalore 1%
Chennai 1%

Legal Fee
Legal fees are typically around 1.5% of the property value.



anand | September 03, 2010

Before buying lands steps are:

1) Cunsult civil adovocate :Copy of LAND legal document/ Parent and child document
2) Check road plan and GEFT Certificate (Land near by road meters and VAO certificate its similar to Sale Deed for public use)
3) Check the land owner has obtained any loan from Bank
4) Pay any initial amount to seller as cheque and agreement copy and proceed for bank load
5)Apply bank loan otherwise the bank has reject land the application (Bank will start analysis after getting amount from your pocket)
6)Buy all required stamp paper at time registration date, otherwise its waste of your money (kept concerned amount as DD it would be great)

Realty Prop | October 31, 2013

Below mentioned is the checklist for buying a property

1) Land titles/ construction permits/ Approvals from authorities:
2) Agreement:
3) Title clearance certificate:
4) Income Tax clearance (37-I and 230 A):
5) Stamp duty and registration:
6) Society clearance and membership:
7) Taking possession of the flat:

sharma | June 10, 2014

A Very tactful and useful piece, would help many to find their right Real Estate Developers In Bangalore

Selena Edwards | March 28, 2021

We as foreigners on a tourist visa residing in India during the Corona Virus lockdown are in a unique situation. Many of us have indeed resided in the country way past 183 days since restrictions international travel make it impossible to do our border crossing and return. Would being in the country over the 183 days allow us the opportunity to purchase property on a tourist visa without legal reprisal?

Stacy | December 08, 2021

I purchased a flat in LODHA NEW CUFFE PARADE. Lodha overcharged me 67lakhs for the flat. Once I connected with the owners after possession, I realized that others had purchased the flat of the same configuration in the same tower, same facing for 50 to 67 lakhs less. LODHA FLEECES NRIs - false hopes of rental - rental yield is 1.2 to 1.7% - you are better off with money in the bank in FDs. Tenants are smart as they get to live in the place for dirt cheap. I have been trying to sell my flat which is outside facing for months now, in vain. Not to mention the inferior construction quality - the tiles just broke off when a man was walking the dog in front of the clubhouse, and I was surprised to see there is NO SOLID FOUNDATION - The tile broke and fell into a pit revealing this fact! The local agents gang up and push only the builders unsold inventory - as they sell flats for builders like Lodha, Ajmera, Oberoi, etc and there are TONS of unsold inventory all over India - not just in Mumbai. Builders slash rates for anyone wanting to buy, so NRIS - the price you see online is the price they want NRIs to pay, not the ones they sold for - as the flats sell for upto 70% off this price! SO CAUTION - DO NOT BUY FLATS AS YOU WILL BE STUCK WITH IT. UNABLE TO SELL.

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